At the Maeil Business newspaper’s chat-fest called the World Knowledge Forum Thursday, big-name economists Paul Krugman, Nouriel Roubini and Barry Eichengreen shared the stage to talk about where the world is going at the moment. Of them, Eichengreen knows South Korea the best.

He just finished writing a book called “From Miracle to Maturity: The Growth of the Korean Economy” with another American, Dwight Perkins, and a Korean, Shin Kwan-ho. They look at South Korea’s 50-year transformation from poverty to affluence in a new way – through data they believe shows what the country must do next.

And their bottom line runs against the economic chatter coming out of the country’s presidential candidates: growth still matters.

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The concluding chapter of their book (published by Harvard’s East Asian Monograph imprint, so it should get some attention in South Korea) provides a set of recommendations to tackle improve the productivity of the country’s service sector, which they view as the factor that will determine whether South Korea lurches along at 3% annual growth or boosts itself up to the 4% to 6% range.

Their message is timely not just because of the presidential election, where the candidates seemed focus almost exclusively on welfare and redistribution of income rather than growing the pie, but because new data seems to appear almost daily testifying to the lurching nature of the economy. On Thursday, it came from the Bank of Korea, which, amidst its second rate cut of the year, lowered its outlook for 2012 growth to 2.4% from 3.0% in July. Following that move, Nomura Research economist Kwon Young-sun published a report headlined “Prolonged Sub-potential Growth.”

Mr. Eichengreen previewed the book in a later talk at the Maeil conference. Before that, we spoke with him about what he sees going on here. An excerpt from the conversation:

WSJ: One of the basic recommendations in your book is for the government to stop picking winners and losers. If you listen to the presidential candidates, they sound like they don’t want to do that.

Mr. Eichengreen: I can’t say I’m up to date on the debate. But there are discussions in the context of the election about making certain sectors the preserve of small enterprises. I can see why politically there is pressure for that. But if your goal is to try to raise productivity in the service sector, which is the main thing Korea has to do given that it is a middle- to high-income country where two-thirds of employment is in the service sector and that number is going to go up over time, to fence off portions of the service sector from competition from large firms isn’t the way to go.

WSJ: The flip side of that is that deregulation is a bad word here. This is a place with a prescriptive rule-setting regime and change that conjures the image of large conglomerates unleashed to do whatever they want. What can Korea do?

Mr. Eichengreen: It’s a delicate balancing act. From the financial crisis in the United States, we learned that consumer protection laws are important. It’s not solely the problem that very large firms have market power and can manipulate markets. Even in segments of the market that were very decentralized, like mortgage origination, consumers were not afforded the protections they needed and deserved. But it is certainly the case that Korea needs, just like the United States, needs a clear, coherent discussion about how to protect the interests of consumers.

WSJ: Has anyone else made this transition?

Mr. Eichengreen: It is a very difficult thing to do. Lots of economies have promoted the growth of industrial exports by keeping their currency down at the expense of consumers. Just like every other aspect of development policy, it’s hard to back away from once it has outlived its usefulness. I suspect the answer is some of the other East Asian tigers. Taiwan and Singapore once upon a time followed similar policies. They’re not widely accused of having undervalued exchange rates today.

WSJ: How great is the danger that an unreformed South Korea will create a stagnant economy like Japan’s?

Mr. Eichengreen: There’s always a danger but I think you have to succeed in doing an awful lot of things wrong all at the same time to get into the mess that Japan got itself into. I think more plausible would be that Korea does not succeed in doing the kind of reforms and innovation needed to boost productivity in the service sector significantly – and growth falls to 3% a year. That would be widely regarded as a disaster here because that’s far below what has become the entrenched expectation. But it is, on the other hand, far better than what Japan has accomplished since the beginning of the 1990s. I think Korea has already learned some lessons about financial regulation from the experience of 1998, from the credit card crisis [in 2003]. It has had plenty of lessons in how to clean up its financial system. But Korea certainly has the capacity to grow faster than 3% a year if it does the right things.

WSJ: In your talk, you’ll focus on the recommendations from the book?

Mr. Eichengreen: Number one, don’t succumb to a sense of angst that 4% growth is some kind of failure. Number two, don’t take 4% growth for granted but recognize that achieving that will require addressing the legacy of the high-growth period. Things like the chaebol, like attitudes towards women, like attitudes toward inward foreign direct investment that haven’t been successfully addressed.

WSJ: There seems to be that, not being in a crisis, Korea will just stick to the old formula.

Mr. Eichengreen: It’s not a crisis country. Those are wonderful subjects for economists. And it’s not experiencing double-digit growth. So it’s a more complicated case. That’s what major economies are. They may just say, ‘We just need to do more of what’s been working.’

WSJ: But that’s not what you’re saying.

Mr. Eichengreen: Right. We know from history that fundamental reorientations of policy rarely occur without crises to prompt them. In Korea, there are some signs of entrepreneurs springing up around the edges outside the chaebol. Maybe the universities will get their act together in terms of doing research. But, it will be a challenge.